Gold slumps into a bear market

Gold has fallen more than 20% since the summer of 2011, as worries about domestic economic problems ease and fears of a government default dissipate.

By Charley Blaine Apr 12, 2013 4:29PM
Updated: 8:01 p.m. ET

Gold
(-GC) is officially in a bear market. There, we said it.

Gold for June delivery on the Comex exchange in New York tumbled $63.50 to $1,501.40 an ounce on Friday. Friday's close was the lowest since July 1, 2011's $1,482.60 and a 20.5% decline from the all-time Comex closing high on Aug. 22, 2011. A decline of 20% is a popular definition of a bear market.

Some analysts blamed the sell-off on suggestions the U.S. economy is stalling. Others said that the selling was due to something entirely different: The dollar is higher because the domestic economy is in better shape than other economies.
Plus, many governments, especially the government of Japan, have been pushing their currencies lower against the dollar to make their exports more competitive.

Gold fell to as low as $1,491.40 in regular hours and traded to as low as $1476.10 in after-hours trading.

Friday's selling looked like a panic and was set off by a 0.4% fall in retail sales for March, a larger-than-expected decline. Department stores and electronics dealers saw some of the biggest declines. Gasoline stations saw lower revenue, but that's because retail gasoline prices fell about 4%. Gold Bars © Stockbyte/SuperStock

Silver (-SI), platinum (-PL) and copper (-HG) fell 2.5% to 5%. Crude oil (-CL) in New York was off $2.22 to $91.29 after falling to as low as $90.27. Brent crude was off $1.41 to $102.97 a barrel.

The stock market closed lower, although far more modestly than the commodity markets. The Dow Jones industrials ($INDU) ended down eight one-hundredths of a point, to 14,865. The blue chips had been down as many as 75 points in the morning.

The Standard & Poor's 500 Index ($INX) was off 5 points to 1,589, and the Nasdaq Composite Index ($COMPX) was off 5 points to 3,295.

The Dow and S&P 500 had hit new highs on Thursday. The Nasdaq's Thursday close was its highest since November 2000.

Since 1999 until this year, gold has been a consistent winner. It surged first because of global uncertainty set off by the Sept. 11, 2001 terror attacks and the Iraq War that erupted in 2003. Then, investors sought gold as a safe haven in the financial crisis that began in 2008.

The metal jumped more than 550% in price between the end of 1999 and the peak in the summer of 2011. And gold's flirtation with $1,900 on an intraday basis in September 2011 prompted predictions it would soon top $2,000. Instead, gold has worked its way lower in fits and starts.

Gold's big run-up came after Standard & Poor's downgraded U.S. debt amid a bitter battle between the Republican-controlled House of Representatives, the Democratic-controlled Senate and the Obama administration. Investors fled to gold out of fear the United States might default on its debt.

When the default worries eased, so did the price of gold and other precious metals.

Gold is down nearly 6% in April and is off 10.4% for the year. The decline has come as the the Dow and S&P 500 have hit record highs and the U.S. economy has show signs of growth. That thesis will be tested in the months ahead, because of a weak global economy and worries that cuts in federal spending will weigh on the economy.

A number of analyses have suggested gold will be pressured for some time.

Goldman Sachs said this week that the turn in the gold-price cycle is accelerating after the 12-year rally, as the recovery in the U.S. economy gains momentum. Goldman reduced its forecasts for the metal through 2014.

Deutsche Bank cut its 2013 gold outlook this week by 12 percent, citing a strengthening dollar and a lack of haven buying, and Societe Generale said in an April 2 report that gold is in a "bubble."

Needless to say, gold and silver exchange-traded funds took a beating. So did gold and silver mining stocks.

The SPDR Gold Shares (GLD) ETF fell $7.10 to $143.95. More than 54 million shares were traded -- five times its average in the 69 trading sessions before Friday.  Newmont Mining (NEM) fell $2.28 to $36.37. It's down 49.6% since peaking at $72.13 in November 2011, and the close was its worst since March 10, 2009.

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16Comments
Apr 12, 2013 6:17PM
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Trillion dollar US annual deficits and climbing, North Korea about to start a war, Europe imploding, Japan printing Bernanke bucks, and you want me to honestly believe gold is softening because things are improving?
Apr 12, 2013 6:49PM
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In view of everything going on in the world.....why don't we pay attention to our own house and let the world do whatever it wants.....in the end this is the only one we have,,,,,, 
Apr 13, 2013 10:25AM
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Mark my words - gold is a commodity and as such is subject to the same rules as any other. You can postulate as many reasons as you like, but it all boils down to enough people talking one direction or the other to drive it up or down. It's happened before and it will happen again. Gold is loosing ground because people are loosing interest, they're already looking for the next hot thing.

Go back and do your homework -

Apr 13, 2013 7:34AM
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Japan's Economy is a third of the American economy. Yet they are printing almost as much fake currency as we are. Europe is in a recession while China will be in one soon. Uncle Ben has a boat load of scam derivatives on his Balance Sheet plus treasuries no entity wants to buy. To top it off, when is the last time anyone has been allowed to see our actual Gold Reserves?

As many posters have noted, print more fake currency will result in only one thing, a Global Collapse. When the Gravy Train which is Fiat Money ends, commodities like Gold will be the only thing with any Real Value. At the end of the day, Gold will never be a long-term loser. Stocks in a environment of insane Global Money Printing can collapse completely. It's no longer a matter of if, but when.
Apr 13, 2013 9:38AM
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The REAL bubbles are DEBT and worthless bonds and paper money, that are really only fit for wiping your ar$e.

Gold can't be created out of thin air, but the market price can be manipulated, just see what happens to the gold price though, when the huge global debt bubbles burst.

Apr 13, 2013 8:10AM
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Entertainment news, to much distractions about money in this video. you learn nothing. Get money advise far away from this.
Apr 14, 2013 12:01PM
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As soon as the Dow makes it's correction, you'll all be talking a different story.  Gold will rebound as quickly as it fell and will once again be the hot item.
Apr 15, 2013 10:24AM
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Looks like the dollar is pounding gold again today. How can that be? Cash is king.
Apr 13, 2013 1:35PM
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The global debt bubble burst in 2008 and gold plummeted. Oil went from 147 to 32. Gas from 4.25 to 1.75. Housing took a 50% haircut and still has not recovered. Stocks lost 50%. ALL of that took place when every country on the planet was printing money like crazy! So tell me again how printing money causes inflation? People believe what they want to believe. NOT what the facts are telling them. Cash is king, deflation is coming. Gold told me that.
Apr 15, 2013 8:14AM
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I agree with t"The Spouse's" comments. The only thing i want to add is that Gold has very limited industrial utility and will be pressuered down even more.
Apr 12, 2013 6:42PM
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Oh, Noooooo.  Glenn Beck must be freaking out!  Glad things are improving so much that gold is no longer the "standard".
Apr 12, 2013 6:58PM
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The people I respect say gold is going to $400 an ounce.We need much more pain in the

gold market.A lot more pain is needed.With the stock market on fire and so many positive

happening in the economy gold could go down to $200.A lot more pain is needed.

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